Law on pay system unconstitutional

COURT REPORT:THE HIGH Court has upheld a challenge by fast-food operators to an order setting minimum pay and conditions for catering workers outside Dublin, in a ruling with serious implications for the pay and conditions of about 200,000 low-paid workers.

Mr Justice Kevin Feeney yesterday declared laws under which minimum pay and conditions are set under Employment Regulation Orders proposed by joint labour committees (JLCs) for approval by the Labour Court to be unconstitutional.

He granted declarations that the relevant provisions of the 1946 and 1990 Industrial Relations Acts were unconstitutional after finding they delegate “excessive” law-making powers concerning pay and conditions to JLCs and the Labour Court without stating any policies or principles to guide those powers.

This delegation of power amounted to an unconstitutional transfer of power as the Acts allowed the Labour Court to be “at large” in making laws which could be enforced by criminal sanction, he ruled.

Given his findings, he declared a regulation order made by the Labour Court in May 2008 fixing minimum pay and conditions for catering workers outside Dublin and Dún Laoghaire was an unlawful interference with the property rights of John Grace Fried Chicken Ltd, Cook Street, Cork, and its operator, John Grace.

The judge also ruled the property rights of the Grace plaintiffs had been unlawfully breached because the employment order required them to pay wage rates determined in an arbitrary and unfair manner.

The May 2008 regulation order allowed for different rates of pay and conditions to apply to fast-food operators outside Dublin and Dún Laoghaire and allowed pay and conditions in excess of the National Minimum Wage Act, he said.

That order was made in an arbitrary manner as different rates were set out for adjoining geographical areas with no identifiable basis for such discrimination.

He adjourned to July 26th the issue of damages for the Grace plaintiffs related to the May 2008 order, which was rescinded in 2009 and replaced by another regulation order which was not challenged.

A number of prosecutions of fast-food operators over the alleged failure to implement the 2008 order – which increased the previous minimum wage rates for catering workers and also dealt with holidays, Sunday work and overtime – have been stayed pending the outcome of the case.

John Grace Fried Chicken Ltd, John Grace and the Quick Service Food Alliance Ltd, also of Cook Street, Cork – which represents the interests of owners of fast-food restaurants including Subway, Abrakebabra, Supermac’s and Burger King – had brought the proceedings against the catering JLC, the Labour Court and the State.

The operators complained that the JLC system allowed for the setting of wage rates higher than the national minimum wage of €7.60 an hour, Sunday pay rates higher than those set under the Organisation of Working Time Act and more favourable working conditions.

The court heard workers in the catering sector have the lowest average earnings across any sector.

While the action related to catering workers, its outcome has implications for all workers whose minimum pay and conditions are set under the JLC system.

The operators challenged the constitutionality of sections 42, 43 and 45 of the Industrial Relations Act 1946 and section 48 of the Industrial Relations Act 1990 which provide for the making of Employment Regulation Orders.

If an employer fails to comply with an order, they are guilty of a criminal offence under section 45 and liable to fines and orders to pay compensation to affected workers.

The action was brought after the National Employment Rights Agency expressed its view to John Grace Fried Chicken that it was underpaying workers in breach of the 2008 order.

After the proceedings were initiated, the May 2008 order was rescinded and replaced by another of June 2009.

In his reserved judgment, Mr Justice Feeney ruled the disputed laws were invalid having regard to Article 15 of the Constitution which vested law-making powers in the Oireachtas.

While JLCs and the Labour Court might be said to be entrusted by the 1946 and 1990 Acts with promoting harmonious industrial relations through regulation of pay and conditions of employment, the Acts were “entirely silent” about what should be taken into account by the Labour Court and JLCs in that regard and instead gave those bodies an “unfettered discretion”, he ruled.